US SHALE OIL & GAS OUTLOOK
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The document discusses trends in US oil and natural gas production from shale and tight resources. It notes that 6 key shale plays account for nearly 90% of domestic oil production growth and all natural gas production growth in recent years. Production has grown due to increased drilling efficiency rather than more rigs. The Bakken and Eagle Ford plays drive most oil growth while the Marcellus drives natural gas growth. Abundant shale gas leads to lower natural gas prices and increased domestic consumption, particularly in manufacturing and transportation. The US is projected to become a net exporter of natural gas by 2025. Rising tight oil and offshore production could push US crude oil output close to historical highs.
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US SHALE OIL & GAS OUTLOOK
- 1. U.S. Energy Information Administration Independent Statistics & Analysis www.eia.gov Outlook for U.S. shale oil and gas IAEE/AEA Meeting January 4, 2014 | Philadelphia, PA By Adam Sieminski, EIA Administrator
- 2. Key insights on drilling productivity and production trends Adam Sieminski, IAEE/AEA January 4, 2014 2 • The U.S. has experienced a rapid increase in natural gas and oil production from shale and other tight resources • Six tight oil and shale gas plays taken together account for nearly 90% of domestic oil production growth and virtually all domestic natural gas production growth over the last 2 years • Higher drilling efficiency and new well productivity, rather than an increase in the rig count, have been the main drivers of recent production growth • Steep legacy production decline rates are being offset by growing production from new wells • Of the six plays, the Bakken and Eagle Ford plays account for about 67% of oil production growth; the Marcellus play accounts for about 75% of natural gas production growth
- 3. Six key plays account for nearly all recent growth in oil and natural gas production Adam Sieminski, IAEE/AEA January 4, 2014 3 Source: EIA, Drilling Productivity Report
- 4. The U.S. has experienced a rapid increase in natural gas and oil production from shale and other tight resources Note: Dry shale gas production data are based on LCI Energy Insight gross withdrawal estimates as of June 2013, converted to dry production estimates with EIA-calculated average gross-to-dry shrinkage factors by state and/or shale play. Source: EIA based on DrillingInfo and LCI Energy Insight Adam Sieminski, IAEE/AEA January 4, 2014 0 5 10 15 20 25 30 35 2000 2002 2004 2006 2008 2010 2012 Rest of US Marcellus (PA and WV) Haynesville (LA and TX) Eagle Ford (TX) Bakken (ND) Woodford (OK) Fayetteville (AR) Barnett (TX) Antrim (MI, IN, and OH) 0.0 0.4 0.8 1.2 1.6 2.0 2.4 2.8 2000 2002 2004 2006 2008 2010 2012 Eagle Ford (TX) Bakken (MT & ND) Granite Wash (OK & TX) Bonespring (TX Permian) Wolfcamp (TX Permian) Spraberry (TX Permian) Niobrara-Codell (CO) Woodford (OK) Monterey (CA) Austin Chalk (LA & TX) U.S. shale and tight oil production million barrels per day U.S. dry shale gas production billion cubic feet per day 4
- 5. U.S. crude oil and natural gas production is up dramatically since 2010 and will continue to grow rapidly; this has strategic implications for the United States: • Refinery operations/investment • Logistics infrastructure investment • Exports of petroleum products • Exports of crude oil and natural gas (LNG) • Management of Strategic Petroleum Reserve 5 Adam Sieminski, IAEE/AEA January 4, 2014
- 6. Natural gas 6 Adam Sieminski, IAEE/AEA January 4, 2014
- 7. U.S. natural gas prices remain well below crude oil prices 7 0 5 10 15 20 25 30 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 energy spot prices 2012 dollars per million Btu Source: EIA, Annual Energy Outlook 2014 Early Release History Projections 2012 Henry Hub spot price Adam Sieminski, IAEE/AEA January 4, 2014 Brent crude oil spot price 2018 2040 Ratio: 7.1 Oil to gas price ratio: 3.4 Ratio: 3.2
- 8. Shale gas leads growth in total gas production through 2040 to reach half of U.S. output 8 U.S. dry natural gas production trillion cubic feet Source: EIA, Annual Energy Outlook 2014 Early Release 0 10 20 30 40 50 60 70 80 90 100 0 5 10 15 20 25 30 35 40 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 Associated with oil Coalbed methane Tight gas Shale gas Alaska Non-associated offshore Non-associated onshore Projections History 2012 Adam Sieminski, IAEE/AEA January 4, 2014 billion cubic feet per day
- 9. 9 0 5 10 15 20 25 30 35 2005 2012 2020 2025 2030 2035 2040 U.S. dry gas consumption trillion cubic feet Source: EIA, Annual Energy Outlook 2014 Early Release Projections History Industrial* Electric power Commercial Residential Transportation** 11.2 4.1 1.7 11.0 3.6 9.1 4.2 0.7 8.5 2.9 *Includes combined heat-and-power and lease and plant fuel **Includes pipeline fuel Natural gas consumption growth is driven by electric power, industrial, and transportation use Adam Sieminski, IAEE/AEA January 4, 2014
- 10. Manufacturing output and natural gas use grows with low natural gas prices, particularly in the near term 10 manufacturing natural gas consumption quadrillion Btu Source: EIA, Annual Energy Outlook 2014 Early Release Adam Sieminski, IAEE/AEA January 4, 2014 0 4 8 12 16 20 24 0 1 2 3 4 5 6 7 8 9 2010 2025 2040 Aluminum Glass Iron and steel Paper Food Refining and related Bulk chemicals Other Metal based billion cubic feet per day durables manufacturing
- 11. 0.0 0.5 1.0 1.5 2.0 2.5 0 100 200 300 400 500 600 700 800 900 2010 2015 2020 2025 2030 2035 2040 Natural gas use in the transportation sector grows rapidly with the largest share in freight trucks 11 natural gas use by mode trillion Btu Source: EIA, Annual Energy Outlook 2014 Early Release Adam Sieminski, IAEE/AEA January 4, 2014 Freight trucks Buses Freight rail and marine Light-duty vehicles 22% billion cubic feet per day Approximate crude oil equivalent, (thousand barrels per day) 2040 Freight trucks Freight rail and marine Buses Light-duty vehicles 290 71 38 9
- 12. U.S. natural gas imports and exports trillion cubic feet per year -6 -4 -2 0 2 4 6 8 10 2000 2005 2010 2015 2020 2025 2030 2035 2040 Alaska LNG exports Pipeline exports to Mexico Pipeline exports to Canada Lower 48 states LNG exports Pipeline imports from Canada LNG imports Source: EIA, Annual Energy Outlook 2014 Early Release 12 -15 -10 -5 0 5 10 15 20 25 billion cubic feet per day 5.4 tcf of exports (14.8 bcf/day) 2.0 tcf of imports (5.4 bcf/day) U.S. natural gas gross exports exceed 5 tcf in 2025 Projections History 2012 2025 Adam Sieminski, IAEE/AEA January 4, 2014
- 13. U.S. becomes a net exporter of natural gas in the near future 13 U.S. dry natural gas trillion cubic feet per year Source: EIA, Annual Energy Outlook 2014 Early Release Adam Sieminski, IAEE/AEA January 4, 2014 -10 0 10 20 30 40 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 Projections History 2012 Consumption Domestic supply Net exports 100 75 50 25 0 -25 billion cubic feet per day
- 14. Petroleum 14 Adam Sieminski, IAEE/AEA January 4, 2014
- 15. Growing tight oil and offshore crude oil production drive U.S. output close to historical high 15 U.S. crude oil production million barrels per day Source: EIA, Annual Energy Outlook 2014 Early Release 0 2 4 6 8 10 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 Tight oil Alaska Other lower 48 onshore Lower 48 offshore Projections History 2012 Adam Sieminski, IAEE/AEA January 4, 2014 U.S. maximum production level of 9.6 million barrels per day in 1970
- 16. 0 5 10 15 20 25 30 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 Transportation sector motor gasoline demand declines, while diesel fuel accounts for a growing portion of the market 16 transportation energy consumption by fuel quadrillion Btu Source: EIA, Annual Energy Outlook 2014 Early Release Adam Sieminski, IAEE/AEA January 4, 2014 Projections History 2012 59% Motor gasoline Jet fuel CNG/LNG 12% 13% 3% 44% 31% 3% 4% Other* Diesel 22% 2030 47% 13% 3% 30% 1% 2040 Ethanol 4% 5% 5% *Includes aviation gasoline, propane, residual fuel oil, lubricants, electricity, and liquid hydrogen
- 17. U.S. petroleum product imports and exports million barrels per day -4 -3 -2 -1 0 1 2 3 4 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 Other petroleum product imports Distillate exports Motor gasoline exports Other petroleum product exports Distillate imports Motor gasoline imports Source: EIA, Annual Energy Outlook 2014 Early Release Adam Sieminski, IAEE/AEA January 4, 2014 17 U.S. maintains status as a net exporter of petroleum products Projections History 2012 Total petroleum product net exports
- 18. U.S. dependence on imported liquids declines, particularly in the near term 18 U.S. liquid fuel supply million barrels per day Source: EIA, Annual Energy Outlook 2014 Early Release 0 5 10 15 20 25 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 Consumption Domestic supply Net imports 40% 32% Projections History 2012 2005 60% Adam Sieminski, IAEE/AEA January 4, 2014 25% 2016 2040
- 19. Energy-related CO2 emissions remain below the 2005 level over the projection period 19 carbon dioxide emissions billion metric tons Source: EIA, Annual Energy Outlook 2014 Early Release 0 1 2 3 4 5 6 7 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 Projections History 2012 2005 Adam Sieminski, IAEE/AEA January 4, 2014 Energy-related carbon dioxide emissions are 9% below the 2005 level in 2020 and 7% below the 2005 level in 2040.
- 20. For more information Adam Sieminski, IAEE/AEA January 4, 2014 20 U.S. Energy Information Administration home page | www.eia.gov Annual Energy Outlook | www.eia.gov/aeo Short-Term Energy Outlook | www.eia.gov/steo International Energy Outlook | www.eia.gov/ieo Monthly Energy Review | www.eia.gov/mer Today in Energy | www.eia.gov/todayinenergy State Energy Profiles | http://www.eia.gov/state Drilling Productivity Report | http://www.eia.gov/petroleum/drilling/